Last week the TVA Board of Directors met and agreed with a TVA staff recommendation to increase their base wholesale electric rates at the same time that their quarterly Fuel Cost Adjustment (FCA) takes effect. This latest increase in the cost of power will take effect October 1 and the two increases combined will amount to a staggering 20% increase in the cost of the energy we purchase from TVA. Of course, the Glasgow EPB will have no alternative but to pass this cost increase along to our customers in the form of higher retail electric rates. By the time these increases trickle down to your bill, the net cost of your electric power will likely go up about 17%.

Since this increase occurs on October 1, and since the bills you get in October and November are normally lower just because the weather is milder, which naturally reduces your consumption of energy, this rate increase will not be greatly noticeable until your December and January bills. Isn’t that when we all really need a surprisingly high energy bill . . . at Christmas time and in January as the bills are rolling in for holiday spending? To say that this is frustrating to us at the EPB would be the very definition of an understatement. We are very disappointed in TVA and in our inability to protect you from this sort of economic shock.

Should the FCA remain at this level for a whole year, combined with the upcoming increase in the base rates, this rate move will take an additional $4 million per year out of Glasgow’s economy. When we think of all the steps we are taking, and have taken, to keep rates low and keep more money circulating in Glasgow’s economy, those steps, while often painful to us, are insignificant compared to the dire effect that this rate increase will have on our economy. Try as we might there is nothing we can think of that might offset this $4 million annual raid on our community’s savings. But we must not give up.

While the "company line" on this rate increase is that an extended drought in east Tennessee has drastically reduced hydroelectric power production (it has) and the cost of coal and natural gas has risen drastically (they have), and that the cost of power TVA must buy from its neighbors is going upward (it is, but the shame is that they are buying power in the first place) the underlying reason for the spiraling cost of electric power in our region is that we have made bad decisions for the last twenty years. We have employed a rate structure that actually encouraged folks to use more electric power than necessary and at the wrong times of day. We have sought new industrial and big box retail customers for the region without any questions being asked about what energy reserves were available to serve them. We have, for much too long, sought out growth for growth's sake, without consideration of the true costs associated with that growth. All of those things have combined to put TVA, and Glasgow, in the position of having to meet each new announcement of a new factory with the need to purchase more power from the market or build more expensive generation to serve that new industry. Those are the real reasons why your power bill is going up.

We tried to purchase power from another supplier, but that attempt was successfully countered by TVA. We built a robust broadband network and have installed advanced meters capable of exploiting a new wholesale rate structure that will reward customers who are willing to change the time of day when they use the most energy, but that new rate structure is excruciatingly slow in being offered. Still, there is more we can do . . . we can all work together to respond to this attack on our treasury by trapping more money in our Glasgow piggy bank. We can fight back by doing this one simple thing. We can all redouble our efforts to spend what money we can in businesses which are owned and operated by our neighbors right here in Glasgow.

When we shop in locally owned businesses we are voting for ourselves. We are saying that we value our dollars and we long to help our neighbors be more successful, which makes us all more prosperous. Shopping from locally owned businesses is a move which cannot be interrupted or usurped by a move by a few folks on a distant board of directors. Local businesses also tend to spend their money locally. A local dress shop probably uses a local accounting firm, a local law firm, a local cleaning service and local electricians and plumbers. Eventually, those local dollars come back to benefit each and every one of us who live here. We will be talking with you a lot more about this concept of localism over the upcoming weeks, months, and years.

So there you have it. The upcoming electric rate increase that we have been warning you about for months is now official. We have worked hard to defend Glasgow from this sort of news, but have yet to be totally successful, but we are not quitting. Now lets all work even harder to find new ways to strengthen our local economy and protect it from those who would take more out of it than we can afford to lose.

We thought this day would never arrive! But, finally, our new cable modem termination system (CMTS) is being installed. The picture shows our own Wade England being assisted by Darie Marza with TVC, poring over the data that must be properly configured for the new CMTS to operate properly.

As we discussed in an earlier message, the new system should improve the performance of our cable modems and your internet access no matter where you are on our system. The new CMTS has much more "horsepower" and should do a much better job handling all of the internet traffic that is transmitted to and from Glasgow every minute of the day. However, as we discussed earlier, this process does come with the possibility of interruptions to your internet services. The work will be ongoing during all hours of the day for the rest of this week. So, the new CMTS should be working by the end of the week but we will be very deliberate in our efforts to move each internet customer to the new system. About three hundred folks have already been moved to the new system so we can do testing with them and figure out all of the nuances of the new CMTS.

On Sunday, September 7, beginning at 6:00 a.m., will start moving over the next group of about 1,400 customers. The following week, on Sunday September 14, we will again start at 6 a.m. and move another 1,400 customers over to the new controller. This process will be repeated, hopefully for the last time, on the following Sunday, September 21. During these moves customers can expect Internet outages on the days we move them. We can’t say for sure how long the outages will be but it is our intention to cause minimal downtime and have the section of customers that we move up and running normally by midnight on Sunday of each week.

So, things are going well so far in our efforts to completely upgrade our internet service. However, your individual performance improvement might be a few more weeks in coming due to our plans to do this is a very methodical manner. Before then you may see our trucks in your neighborhood doing some fine tuning on the broadband equipment before the final moves are made.

On another note, you have likely also been seeing some messages from a new anti-SPAM device we are testing from Barracuda Networks. If you have been seeing a drastic reduction in the amount of SPAM, or junk email, coming into your inbox, that is a result of the new Barracuda device. You might also be seeing daily reports from the device delivered to your inbox which detail the number and characteristics of junk email it has stopped on your behalf. All you need to do is open that report from Barracuda and review the mail it has trapped. If you want any of it actually delivered, you can tell it to deliver them. If you want any of it permanently deleted, you just have to click on "delete" beside the messages you want gone.

Presently we are only evaluating the Barracuda device to see how effective it is. We'll keep you posted on how all of this goes!

Later this week the news that we have been warning our customers about for the last couple of months will finally become official -- TVA will announce that the cost of electric power in Glasgow will again increase sharply on October 1. I am still forecasting something in the 15% range. Of course, everyone will be upset over this announcement, but what no one will likely mention is that another increase of this magnitude is likely to occur again on January 1, 2009. Instead of quoting what this increase will cost some imaginary "average" homeowner, let's just make it easier. Drag out your most recent electric bill and look at the electricity portion of the bill. Add 15% to that cost and you will see the sort of impact this is going to have on your budget.

The real shame about this is that the regular person, who is already challenged by the rapidly increasing cost of everything they need to survive, had little, if anything, to do with the real causes for these rapid increases in the cost of electric power. While it is true that TVA is facing upward pressure on their rates due to drought conditions that have limited their hydroelectric power capacity and sharp increases in the cost of coal and natural gas (both items that they purchase and burn to produce electricity), the real cause of this pain is a wholesale rate policy that has existed for the last twenty years. This rate structure has given the signal to everyone that there is an infinite supply of energy and that we should use all of it that we possibly could.

Additionally, TVA's economic development team has continued to pursue new development and has begged new industries to locate in the TVA region, even when they knew that they did not have the native generation capacity to serve those new loads. As a result, each new celebration for the announcement of a new factory locating in the region has been followed by a frenzy of telephone calls to TVA's neighbors in which TVA's power supply planning folks had to make deals to purchase energy from those neighbors to serve the new factory. The really nutty thing about that is the fact that TVA has had to pay much more for the energy purchased from those neighbors than what they are charging the new factories for that energy. Most thinking folks would see that such a "buy high - sell low" philosophy will not work without the rest of the existing customers being willing to pay more so the new loads can be subsidized. When December and January roll around, and you are staggered by the bill for the electricity you are using, try to remember how good you are supposed to feel about the new Toyota plant in Mississippi and the recently announced Volkswagen plant which is locating in Chattanooga. You are helping purchase the electric power for them!

It is too late now, but if only our leadership could have read this article back in 1990, and if they had the guts to follow its advice, we could be living in an energy "garden of eden" by now. It is a shame, because, as a result of a lack of leadership and our lack of demanding it, we are now about to be cast out of paradise, doomed to walk in the equivalent of energy purgatory for the foreseeable future. As I have said before, the energy cost options look more promising in Glasgow than those of most of the other TVA cities, but even here, things are going to get worse before they start getting better.